Global Trade Base Trends
February 9, 2009 - 2008 Exports - Patrick Donnell, President.
- Only fools are not going international with their business. What a harsh statement. We all know that a person cannot be in charge of a domestic company that makes product, manages raw materials through to finshed goods, market products and keep up with all the issues involved with business in the current economy. At least, we would think that to be true. Sometimes it is not true. Sometimes, the business owners get so caught up in the way that they have always done things so they cannot adapt to the ever changing economic landscape.
- Let's diagnose the export market:
- In 2005, U.S. exports were $927.5 Billion
- In 2006, U.S. exports were $1,024 Trillion - $96 Billion in Growth
- In 2007, U.S. exports were $1,125 Trillion - $100 Billion in Growth
- In 2008, U.S. exports were $1,377 Trillion - $252 Billion in Growth
- What does the 2008 growth mean? The U.S. dollar was weaker than it has been since the great depression of the 1920's and 1930's. A simple example of the 2007/2008 comparison is this. Let's say that a canned good in 2007 was hypothetically $1.00 per can. That meant if a person overseas bought one canned good that they spent $1 dollar. If the U.S. dollar dropped enough then in 2008, the foreign exporter could buy two cans of the product for the same dollar. This would mean that if export volumes were the same, then the amount of product exported would have increased. The fact that the export dollar volume increased means that they bought more product due to the devalued dollar AND that they bought $252 Billion more in dollars. Not only did they get more product but they spent a whole lot more getting a whole lot more product.
- All the while, business owners watched the doom and gloom projections within our own country. They began panicking and became reluctant as their sales diminished in their current market. Yet, they are still clinging to the business model that is no longer working for them. Meanwhile, international markets grew more last year than they ever have in the history of the United States.
- We still encounter resistance in taking these domestic companies into international markets. They foolishly choose to stay only in the current domestic economy while they watch sales drop. Please understand my frustration with these business owner's decision. The smallest international transaction is a multi-million dollar revenue stream.
- We look for domestic food and HBA producers that have excess production capacity and we sell that unused capacity overseas as an asset. It is a sound business model. The international growth of imports FROM the United States proves that it is not only one direction to go in but the best direction to go in. Can you imagine how much growth we will see this year? We cannot guarantee a sale but will not represent any client that we do not expect to make a profit from.